level 2, kalpataru synergy, opp. - ircast.com.au strategies leading research group focused on mining...
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CRU STRATEGIES a division of CRU International Limited
Chancery House
53-64 Chancery Lane
London
WC2A 1QS
UK
Tel: +44 20 7903 2000
Fax: +44 20 7903 2172
517, Tower 2
Bright China Chang An
Building
7 Jianguomennei Avenue
Beijing 100005, China
Tel: +86 10 6510 2206
Fax: +86 10 6510 2207
Augusto Leguía Norte
Nº 100 of.506
Las Condes
Santiago
Chile
Tel: +56 2 2231 3900
Fax: +56 2 2231 4314
PO Box 1269
Langley
WA 98260
USA
Tel: +1 360 321 4707
Fax: +1 360 321 4709
Level 2, Kalpataru Synergy, Opp.
Grand Hyatt
Santa Cruz (East)
Mumbai 400055
India
Tel: +91 22 3953 7395
Fax: +91 22 3953 7200
CRU STRATEGIES
1. Introduction to CRU
2. Short-term outlook
3. Long-term outlook
4. Summary
Presentation overview
CRU STRATEGIES
1. Introduction to CRU
2. Short-term outlook
3. Long-term outlook
4. Summary
Presentation overview
CRU STRATEGIES
Leading research group focused on mining and metals,
chemicals and fertilizers
Analysis Consultancy
(Strategies) Events
• Daily / Weekly news
• Fundamental analysis
• Market forecast
• Cost analysis
• Asset & Project
Valuation
• Negotiation Support
• Market Decisions
• Strategy Development
• Conferences
• Seminars
• Events
• Workshops
• Networking
CRU STRATEGIES
1. Introduction to CRU
2. Short-term outlook
3. Long-term outlook
4. Summary
Presentation overview
CRU STRATEGIES
Demand is considerably weaker than expected in 2011... Net primary demand forecasts, in ‘000 t U3O8
Data: CRU
0
50
100
2010 2011 2012 2013 2014 2015 2016
kt U
3O
8
Pre-Fukushima Preliminary 2013 Forecast
-22%
-10%
CRU STRATEGIES
...and there is a significant amount of potential primary
supply in the pipeline... Potential supply in ‘000 t U3O8
0
10
20
30
40
50
60
70
80
90
100
2009 2010 2011 2012 2013 2014 2015 2016
Po
ten
tial
Su
pp
ly k
t U
3O
8
9% potential growth in uranium
Data: CRU
CRU STRATEGIES
...however we expect this to be mostly offset by project
delays and Chinese stockpiling... Net primary demand less primary supply, in ‘000 t U3O8
-10
-5
0
5
10
15
2009 2010 2011 2012 2013 2014 2015 2016
kt U
3O
8
Data: CRU
CRU STRATEGIES
...but the market is still weak... Spot price, June 2006 – June 2013
Date: UxC, Tradetech
40.00
60.00
80.00
100.00
120.00
140.00
160.00Ju
n 0
6
Oct
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$/l
b U
3O
8
CRU STRATEGIES
...and current spot prices render some operating mines
uneconomic or marginal... Business costs 2013
0
10
20
30
40
50
60
- 10 20 30 40 50 60 70 80
$/lb
Cumulative production t U3O8
CRU STRATEGIES
...although the long-term price lends greater support,
spot purchases are remain discretionary. Spot price and long-term price, June 2006 – June 2013
40.00
60.00
80.00
100.00
120.00
140.00
160.00Ju
n 0
6
Oct
06
Feb
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$/l
b U
3O
8
CRU STRATEGIES
1. Introduction to CRU
2. Short-term outlook
3. Long-term outlook
4. Summary
Presentation overview
CRU STRATEGIES
Long-term demand drivers remain robust and are
particularly relevant for China...
CRU STRATEGIES
...and China is central to the demand story for uranium as
it already is for so many other minerals... Uranium demand, 2010 to 2035
0
60,000
120,000
180,000
201
0
201
1
201
2
201
3
201
4
201
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3
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5
ton
ne
s U
3O
8
USA Japan Europe China - Mainland India Russia RoW
CRU STRATEGIES
Project gateways: a project must progress in a number of
different areas before it can reach production
1 2 3 4 5
Speculative Possible Probable Committed Operating
Geology
Metallurgy/
technology
Engineering
Social and
environmental
Marketing/
commercial
Transportation
Ownership/
management
Financial
CRU STRATEGIES
Long-term we will need to explore and develop more new
projects; the medium-term is more complex. Long-term gap analysis
0
100,000
200,000
2010 2015 2020 2025 2030 2035
ton
nes
U3O
8
Committed Probable Possible Net primary Demand
CRU STRATEGIES
The project pipeline indicates that grades are getting
lower and average resource bases smaller...
0.1
1
10
100
1000
0.1 1 10 100 1000 10000
Closed Mine
Operating Mine
Development
Feasibility
Exploration
Stalled
Pre-Mined Resource (mt ore)
Gra
de (
kg U
3O
8/t
)
CRU STRATEGIES
...meaning a price of around $65/lb in real terms will be needed to
incentivise the new projects required to meet demand Economic Costs Curve, 2030
0
20
40
60
80
100
120
140
160
0 20 40 60 80 100 120 140 160 180
No
min
al U
S$/l
b o
f U
3O
8
Cumulative Production ('000 tonnes U3O8)
CRU STRATEGIES
1. Introduction to CRU
2. Short-term outlook
3. Long-term outlook
4. Summary
Presentation overview
CRU STRATEGIES
• Demand-side
– Chinese growth story underpins a strong long-term outlook
– India and countries new to nuclear power also contribute
– Political uncertainty decreases and we trend towards more acceptance of
nuclear power
Summary
• Supply
– Short-term the industry is well supplied
– Advanced projects can meet medium term demand at higher prices
– Exploration and project development required to support LT demand growth
• Prices
– Limited upside over the next 6-18 months
– LT price of around $65 required to encourage project development
CRU STRATEGIES
CRU’s Research
CRU contacts for further information:
In London
Ian Hiscock, Senior Consultant, CRU Strategies
(+44 20 7903 2244 * [email protected]
In Sydney
Philip Sewell, Business Development Manager, Australasia, CRU
(+61 2 9387 8842 * [email protected]
In Perth
Allan Trench, Regional Director, Australasia, CRU
(+61 (0)43 709 2466 * [email protected]
Website: www.crugroup.com
CRU STRATEGIES
Thank you for your attention